Amazon’s Australian foray could spark a frenzy in retail tech discounting

Predicted 10-percent price drop across the board

Shares

When Amazon hits Australian shores it would undercut the local brick-and-mortar retailers by 15-percent, according to analysis by investment bank Citi.

Although premium, flagship and newly-released products are actually up to 10-percent cheaper to purchase from Australian retailers than from Amazon, the survey found that the online retail giant is around 15-percent cheaper for products on average. This is apparently due to Amazon’s dominance in the field of slightly older tech and low-to-mid priced products.

Citi predicts that this will force the existing retailers to drop prices by around 10-percent themselves in order to compete, resulting in a period of cheaper consumer tech. This would hit hardest for smaller retailers and department stores with electronic sections, but would mean the major retailers — JB Hi-Fi, Harvey Norman, and the Good Guys — will also have to play along.

However it’s not all bad news for the big stores... kind of. Based on the similar Amazon incursion that occurred in the UK, Citi reckons that these companies will see their margins recover “five or more years” after the introduction, meaning it isn’t necessarily the end of the line for these bricks and mortar businesses.

Although Amazon hasn’t officially announced when it plans to arrive in Australia, it has confirmed its intentions to launch retail operations Down Under. A report from an ex-employee suggested Amazon’s local retail business could be operational by the end of 2018.